World Commerce & Contracting (WorldCC), a global leader in contract management and commercial excellence, recently released its highly anticipated report, "The ROI of Contracting Excellence." This comprehensive study, conducted in collaboration with Deloitte, highlights the critical role contracts play in shaping an organization's financial success and identifies areas for improvement in contract formation and management.
The report delves into the heart of the matter - contracts are not just legal documents but are critical enablers of an organization's performance. However, the process by which contracts are formed and managed often lacks the investment and attention it deserves. In 2014, WorldCC conducted research that revealed an average value erosion of 9.2% of contract value, showcasing the significant room for improvement.
Now, nearly a decade later, WorldCC has collaborated with Deloitte to update its research, drawing insights from a comprehensive dataset encompassing more than 1,200 organizations. The study sought to assess the progress made since 2014 and explore the influence of technological advancements and market volatility on contract value erosion.
The findings indicate a modest improvement, with average value erosion now estimated at 8.6%. However, there are substantial variations between sectors, with top performers achieving erosion rates slightly over 3% while the worst performers experience erosion exceeding 20%. These figures underscore the importance of addressing the factors that limit progress and embracing a multi-functional approach to contracting excellence.
"The ROI of Contracting Excellence" report outlines the steps needed for improvement and identifies key areas in the contract lifecycle where changes can yield the best return on investment. It serves as a compelling call to action, emphasizing the need for sustained executive focus and increased investment in contract management.
One key finding from the report is the importance of contract lifecycle management (CLM) investments. Over the past five years, 78% of organizations have made some investment in CLM, with a majority of those investments occurring within the last year. This highlights the growing recognition of the need to optimize contract management practices.
Another significant area of focus is contract simplification. Contracts are often complex, containing critical information and data. However, the report highlights that around 90% of business people find contracts difficult to understand. Simplification is key to improving the ease of doing business and enabling better decision-making.
The report also emphasizes the importance of skills and experience in achieving contracting excellence. Organizations that have made investments in the contracting process have upskilled existing resources and brought in new resources or skills. This highlights the recognition that contracting excellence is achieved through the development of efficient and effective contract outcomes.
"The ROI of Contracting Excellence" report serves as a valuable resource for organizations seeking to maximize the value within their contracts. It offers actionable recommendations, real-world examples, and practical steps to transform contract management processes. With its comprehensive insights, the report enables organizations to unlock the untapped potential of contracting and drive their financial success.
"We are excited to share this groundbreaking report, which unveils the tremendous potential for organizations to optimize their contracting processes," said Tim Cummins, President of WorldCC. "Contracts are not only legal instruments but also strategic assets that impact financial performance. This report provides valuable insights and actionable recommendations for organizations seeking to unlock the full value of their contracts."
To access the full report and gain in-depth knowledge of the impact of contracts on your organization's bottom line, visit https://info.worldcc.com/roi.
About World Commerce and Contracting
World Commerce & Contracting (WorldCC) is the world's leading authority on contract and commercial management. With over 70,000 members across 180 countries, including many of the world's largest corporations and government agencies, WorldCC provides research, benchmarking, and networking opportunities to professionals who manage commercial contracts.
As a non-profit, WorldCC's mission is to enable organizations to realize their full commercial potential by improving their contract and commercial management practices. They provide a range of services to support this mission, including training, certification, and advisory services. WorldCC's training programs are recognized as the industry standard for contract and commercial management professionals.
WorldCC was founded in 1999 as the International Association for Contract & Commercial Management (IACCM) and rebranded to its current name in 2020. The organization is headquartered in the United States, with regional offices in the United Kingdom and Australia.
About Deloitte
Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our global network of member firms and related entities in more than 150 countries and territories (collectively, the ‘Deloitte organization’) serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 415,000 people make an impact that matters at www.deloitte.com
Deloitte’s U.S. Legal Business Services practice supplements Deloitte’s existing legal department offerings that include legal management consulting and legal managed services designed to streamline, automate, and transform legal departments. Specific services offered include contract lifecycle management, legal entity management, regulatory consulting, knowledge management, data governance, legal spend analytics, legal sourcing, and forensics. Deloitte Legal Business Services, in collaboration with Deloitte Legal which practices law outside the US, provides clients with a unique global approach to the marketplace. The Deloitte US firms do not practice law or provide legal advice. www.deloitte.com/an/en/services/legal.html